No More Champagne

by David Lough

  Jennie opened a bank account for Winston when he was fourteen, instructing the London & Westminster’s manager to transfer twenty shillings into it each month from her own account. She tried her best to install a sense of financial discipline in him: ‘The only thing you must avoid on all accounts is not to overdraw the money due to you.’ Her credentials for offering such advice are dubious; in any event he ignored it.31

  Winston was seventeen when Lord Randolph returned from Africa. When Winston won a fencing competition at his school, Harrow, Lord Randolph gave him two pounds to buy a present for his instructor. He lost his temper when Winston overspent and asked for more. ‘If you were a millionaire you could not be more extravagant,’ Lord Randolph wrote. ‘I think you have got through about £10 this term. This cannot last & if you are not more careful should you get into the army six months of it will see you in the Bankruptcy Court.’32

  Winston turned to female relations for help: Aunt Cornelia, one his father’s sisters who had married into the wealthy Guest steel family, and Duchess Lily, the wealthy American heiress who had married the 8th duke of Marlborough, were special favourites. His mother could also be relied on to help, albeit only after a ritual dressing-down. ‘Yr wants are many – & you seem a perfect sieve as regard money,’ she wrote in answer to one such plea; nevertheless, she enclosed a thirty-shilling postal order.33

  When Winston failed to pass the Royal Military Academy’s entrance exam for his intended career as an army officer his increasingly unwell father was exasperated and threatened his son with a career ‘in business’ if he failed again. (‘I could get him something very good with Natty [Nathaniel, Lord Rothschild] or Horace [Farquharson] or Cassel,’*4 Lord Randolph told the dowager duchess.)34 Winston did fail a second time, but his improved placing (203rd out of 664 candidates) led to a rapid transfer into a London crammer that specialized in the entrance exam. Back at Harrow, Jack was left to settle his older brother’s debts to fellow pupils. At his third attempt, Winston passed the exam, but he came too far down the list to qualify for the less expensive infantry and would therefore have to enter the cavalry. His increasingly irascible father was scathing:

  By accomplishing the astonishing feat of getting into the Cavalry, you imposed on me an extra charge of some £200 a year... Make this position indelibly impressed on your mind, that if your conduct and action at Sandhurst is similar to what it has been in the other establishments in which it has [been] sought vainly to impart to you some education, then that part of my responsibility for you is over. I shall leave you to depend on yourself giving you merely such assistance as may be necessary to permit of a respectable life.35

  However, when he arrived at Sandhurst Winston was immediately elevated to the infantry. Admitting to some ‘past extravagance’, he appealed to his father for a fresh start to his finances: ‘I should so much like to have an annual allowance – payable quarterly. Out of it, I would get my clothes, pay for my amusements – railway journeys – and sundries (cigarettes etc): in fact everything... I will promise to keep accounts of what I spend and send them to you regularly.’36

  Lord Randolph, however, was not yet ready to cut the purse strings, as he explained to the dowager duchess: ‘I thought he was somewhat precipitate in his ideas about an allowance & that his figures were too summary. I told him I would give him £10 a month out of which he would have to pay for small articles of clothing, & for other small necessities but that I will continue to pay his tailor and haberdasher.’37

  His health deteriorating, Lord Randolph often forgot to send a cheque or sent it late, making his son late in paying his mess bills. ‘It is no use me trying to explain to Papa,’ Winston complained to his mother. ‘I suppose I shall go on being treated as “that boy” until I am 50 years old.’38 After a rare visit to Sandhurst in November, however, Lord Randolph was impressed by the change in his son. Flush after a recent share sale, he explained to the dowager duchess that he had relented:39 ‘I paid his mess bill for him £6 so that his next allowance might not be “empiété” upon.’40

  Early in 1894 the thaw between father and son came to an abrupt end when the 7th duke’s gold watch ended up at the bottom of a Sandhurst lake; the local fire brigade had to pump the lake dry to recover it. After being repaired, the watch was handed to Jack and Winston was told to buy his own replacement.41 ‘Oh! Winny, what a harum scarum fellow you are,’ his mother commiserated the next day. ‘I am sending you £2 with my love.’42

  In April Lord Randolph’s doctors advised him to retire completely from politics and to take a trip around the world, accompanied by his wife and a specialist. To fund the voyage he sold L’Abbesse de Jouarre for £8,00043 and borrowed £3,000 against his remaining gold shares,44 but he made no special provision to keep up his son’s allowance at Sandhurst. A worried Winston used a new typewriter to ask his father for an increased sum of £15 to be sent each month to a new account that he had opened with the army’s bankers, Cox & Co.*5

  Lord Randolph’s cool reply – the last letter he would write to his son – dissected Winston’s request, sentence by sentence:

  You write stupidly on what you call the ‘subject of finance’. ‘Since I had my allowance you have given me a little extra without which I should have been terribly hard up (elegant). If therefore (logical!) you could make a deposit!! of say (commercial & banking expression) £15 which I was to draw upon (rather frail security) without real necessity (very difficult to define) & which I was to account to you for as I drew it out (perhaps you would, you have to send your letter 10,000 miles) it would make things so much easier.’ Would it? Perhaps. I do not comment on this letter so delicately expressed except to observe that Jack would have cut off his fingers rather than write such a very free-spoken letter to his father... Finally if you are going to write letters to me when I am travelling, type-written & so ridiculously expressed I would rather not receive them.45

  Winston wrote to his parents while they travelled, but there was no reply. ‘I never saw him again, except as a swiftly-fading shadow,’ he later recalled.46 His father’s health declined so sharply after they reached Asia in November that Jennie and the doctor decided on an immediate return home. ‘He is quite unfit for society,’ she told her sister.47 They reached London just in time for Christmas, but Lord Randolph had less than a month to live. He fell into a coma and died on 24 January 1895 aged forty-five.

  Writing almost forty years later, Winston Churchill claimed that his father had ‘died at the moment when his new fortune almost exactly equalled his debts’.48 This judgement has since been accepted by most historians: the gross value of Lord Randolph’s estate was published as £75,971,49 but he is said to have owed the Rothschilds’ bank anything between £66,000 and £72,000, leaving almost no net balance. In reality, the Rothschild ledgers reveal that Lord Randolph owed the bank only £12,758 on 31 December 1894, less than a month before he died and after settling all the bills for his last voyage.50 So, after deducting the amount still owed them, the Rothschilds sent Lord Randolph’s executors two cheques totalling £54,237.51

  A boom in southern African mining shares had made this result possible. The boom continued throughout 1894 and the early part of 1895, with the result that at least one firm of stockbrokers had been forced to employ separate shifts of day and night staff to cope with the volume of transactions. ‘In clubs and trains, in drawing rooms and boudoirs, people are discussing “Rands” and “Modders”,’ one financial journalist reported.52

  The boom was still under way in March 1895, but Lord Randolph’s executors decided that they must sell his remaining 2,300 shares. It was believed that ‘Rands’ were too risky as a share to be owned by a trust for a widow with young children. The Rothschilds sold the remaining shares in two batches at an average price of over £28 each, more than 100 times what Lord Randolph had originally paid. Years later, Winston Churchill ruminated on what might have happened if the executors had held on for longer: ‘Soon afterwards they rose to nearly fifty or s
ixty times this price; and had he lived another year he would have been possessed of a substantial fortune,’ he claimed, but in fact prices quickly subsided six months later in October, after heavy sales from Paris.53

  Drafted after the 7th duke’s sudden death in 1883, Lord Randolph’s will closely followed the paternal template. It left his widow a small cash legacy to meet immediate bills, then settled the rest into a trust, to be known as Lord Randolph Churchill’s will trust. Although Jennie was not entitled to any capital, all the income earned by the trust’s investments was to go to her; the children would take over the income after her death, but the capital was to remain protected in the trust.

  There was, however, a twist: if Jennie remarried, Lord Randolph’s trustees would be allowed to divert half of the trust’s income to Winston and Jack, an important provision given the social code of the day, which linked their marriage prospects to their financial ‘expectations’.54 When Jennie did remarry six years later, nobody remembered this clause.

  *1 These may or may not have been related to the onset of syphilis, the latent period of which can continue for ten or twenty years before the final phase. Modern medical opinion suggests that syphilis may not have been the problem: Dr John Mather has suggested that Lord Randolph may have been suffering from a left-sided brain tumour; others have advanced the possibility of a genetic bipolar disorder. However, the illness was certainly treated as syphilis.

  *2 The 8th duke required more money to modernize Blenheim. He enlisted help in finding a rich American bride from Leonard Jerome, who suggested a thirty-three-year-old widow, Lily Hammersley. A native of Troy in the state of New York, Lily had inherited $5 million on the death of her first husband. After the wedding in 1888, she was affectionately known as ‘Lily of Troy’. Leonard died in 1891; his wife Clara paid off his debts just before she died in 1895.

  *3 Beit would float Deep Levels (his holding company for the individual deep-level mines in the Witwatersrand district) as the renamed Rand Mines in 1893. He allowed his friends, such as the Rothschilds, Sir Ernest Cassel and Randolph Churchill, to buy shares privately before the flotation.

  *4 Ernest Cassel (1852–1921), born to a Jewish family in Germany; arrived in Liverpool 1869; started his own banking business in London 1870; a City leader investing in railroad companies, sugar, diamond and gold mines by 1900; financial adviser to the prince of Wales (later Edward VII); retired following the king’s death 1910. Knighted 1899.

  *5 Cox & Co. had served British army officers since 1758, when Richard Cox became secretary to Lord Ligonier, Colonel of the Grenadier Guards. Among the tasks Ligonier delegated to Cox was the disbursement of pay to his officers and men. Cox was so efficient that by 1815 he had been asked to perform the same task for the Household Brigade, Royal Artillery and almost all cavalry and infantry regiments.

  3

  ‘We are damned poor’

  Distant Army Duty, 1895–9

  Exchange rate: $5 = £1

  Inflation multiples: US x 30; UK x 100

  WHEN HIS FATHER died Winston Churchill immediately transferred from the infantry to a cavalry regiment commanded by a family friend, Colonel John Brabazon. Subalterns in the 4th Hussars earned ten pounds a month,1 but they were expected to equip themselves for hunting and polo. Duchess Lily helped by providing Winston with a ‘charger’ and his mother agreed to come up with the £500 a year allowance that Churchill told her he would need to ‘maintain his position’.2

  Widowed at the age of forty-one, Jennie had been left with almost £5,000 a year from the various Churchill and Jerome trusts;3 it was a level of income enjoyed by only a few thousand people in Britain at the time.4 However, Jennie was not supposed to touch the trusts’ capital and had none of her own. The distinction between capital and income appeared to escape her anyway: she left for Paris, accompanied by her late husband’s butler and her maid, establishing herself in an apartment near the Champs-Elysées, which was swiftly redecorated.

  Jennie enjoyed friendships (or more) with the millionaire American lawyer Bourke Cockran, Hugh Warrender, William Waldorf Astor (the couple were briefly rumoured to be engaged) and the prince of Wales, who invited her aboard the Royal Yacht Britannia. Back in London for the autumn she bought a lease on a seven-storey house near Marble Arch, which she also redecorated ‘from top to toe’, installing electric light and hot water. Jennie remained a popular guest at country house weekends and stayed close to her husband’s financial friends Ernest Cassel and Alfred and Natty Rothschild. Her children would benefit from her social network, but it came at a great cost in lavish spending on clothes and entertaining.

  Winston Churchill’s leisurely military year was divided into seven months of summer ‘training’ and five of winter ‘social activities’, during which officers were expected to take at least ten weeks of ‘uninterrupted repose’.5 Unable to afford his fellow officers’ lifestyle of daily hunts, Churchill sought out a foreign adventure. His attention turned to the long drawn-out guerrilla campaign between Spanish occupiers and local rebels in Cuba and Sir Henry Wolff, an old political colleague of his late father’s and now Britain’s ambassador in Madrid, secured permission for a visit.

  Churchill funded the expedition by badgering his mother into buying a transatlantic ticket for him and she also arranged for him to write a series of dispatches at five guineas each for the Daily Graphic, owned by one of her friends. With a colleague, Churchill sailed to New York, where another of his mother’s friends, Bourke Cockran, introduced the pair to a world of luxury, cigars and top-level contacts at his Fifth Avenue apartment, before sending them on their way to Miami by private railway car. From Cuba Churchill described the experience of coming under fire for the first time. His report was vivid enough for T. Heath Joyce, the Daily Graphic’s editor, to compliment him handsomely, while enclosing a cheque for twenty-five guineas.

  Churchill rejoined the 4th Hussars in the spring of 1896, six months before the regiment began a posting to Bangalore which was expected to last twelve years. Officers took the summer off to arrange their affairs, but Churchill concentrated on his polo, pressing his mother to lend him £200 to buy a ‘really first class animal’ to complement his ‘five quite good ponies’. If she could not, he would borrow from his bankers at Cox & Co. with the help of her guarantee. ‘It is not a question of spending the money,’ he argued, ‘but of putting it into stock – an investment in fact – which though not profitable would produce much pleasure. Our finance is indeed involved!! If I had not been so foolish as to pay a lot of bills I should have the money now.’6

  As the summer wore on, the idea of moving to India palled. Casting around for an alternative, Churchill tried to persuade the Daily Chronicle to appoint him as its special correspondent in Crete. Next he begged his mother to engineer a transfer within the army. ‘A few months in South Africa would earn me the S.A. Medal and in all probability the [British South Africa] company’s Star,’ he suggested. ‘Thence hot foot it to Egypt – to return with two more decorations in a year or two – and beat my sword into an iron despatch box.’7

  Lady Randolph’s lobbying proved fruitless: her son sailed to India, where his time was soon occupied by polo, reading and Miss Pamela Plowden,1 the daughter of the British resident in Hyderabad. In My Early Life (1930) Churchill described the financial pressures on a young cavalry subaltern in India:

  It was... better in a cavalry regiment in those days to supplement the generous rewards of the Queen-Empress by an allowance from home three or four times as great. Altogether we received for our services about fourteen shillings a day, with about £3 a month on which to keep two horses. This, together with £500 a year paid quarterly [Churchill’s allowance from his mother] was my sole means of support: all the rest had to be borrowed at usurious rates of interest from the all-too-accommodating native bankers. Every officer was warned against these gentlemen: I always found them most agreeable: very fat, very urbane, quite honest and mercilessly rapacious.8

  Churchi
ll and his mother wrote to each other weekly, but letters took at least a fortnight to arrive, confusing the correspondence. Lady Randolph meant to mark her son’s twenty-second birthday in November with a cheque for £50: ‘I know you are hard up, but so am I – lost cheque book – will follow.’9 Half followed a week later and the rest just before Christmas, by which time she was also cheerfully paying off some of Churchill’s outstanding London bills. ‘I have communicated with Mr Richmond of Crouch Hill and it will be all right,’ she reassured him. ‘I also am paying the rest of the outfit bills, also a bill of yrs at R. Paynes [wine merchant] & one at Leaders.’10 She was less pleased to be summoned to the bank in February to guarantee a cheque that her son had written on an empty account:

  It is with unusual feelings that I sit down to write to you my weekly letter. …I went to Cox’s this morning & find out not only have you anticipated the whole of yr quarter’s allowance due this month but £45 besides – & now this cheque for £50 – & that you knew you had nothing at the bank. …I must say I think it is too bad of you – indeed it is hardly honourable knowing as you do that you are dependent on me & that I give you the biggest allowances I possibly can and more than I can afford. I am very hard up... I have told them at Cox’s not to apply to me in future as you must manage yr own affairs. I am not responsible. If you cannot live on yr allowance from me & yr pay you will have to leave the Fourth Hussar. I cannot increase your allowance.11

  She took up cudgels again the following week, before Churchill could reply:

  What an extraordinary boy you are as regards your business affairs. Dearest this is the only subject on which we ever fall out. Out of £2,700 a year, £800 goes to you two boys, £410 for house rent and stables, which leaves me about £1,500 for everything – taxes, servants, stables, food, dress, travelling – & I now have to pay interest on money borrowed. I really fear for the future... I make out that you get about £200 pay, which makes yr income for the present £700 a year. Of course it is not much & I can quite understand that you will have to deny yourself many things if you mean to try & live within it. But the fact is that you have got to do more than try.12